IFX Market Report: Friday 19th March 2021

Thursday’s Bank of England meeting went as expected yesterday as the UK central bank kept rates at 0.1% and made no changes to its bond buying programme at £895B. The BoE stressed that the outlook for the UK economy remains “unusually uncertain” and “continues to depend on the evolution of the pandemic”. While uncertain, given the success of the vaccine effort the Bank was dovish in making clear its hopes of a “rapid” economic recovery. Despite leaving rates unchanged at record lows, the Monetary Policy Committee (MPC) are willing to “take whatever additional action is necessary to achieve its remit”. With that said, the MPC made it clear it does not intend to tighten monetary policy until their “2% inflation target” is achieved and maintained “sustainably”. The Bank also claimed that the rise in unemployment will be less severe than had be once feared. Predictions in February indicated that UK unemployment would peak at 7.75% in 2021, but after the latest extension of the government’s furlough scheme, the near-term rise in unemployment is expected to be “more moderate than suggested by the MPC’s February projections”.

The BoE event today did little to inspire Cable, the pair made a steady decline from the open. GBPUSD opened at 1.3987 and closed at 1.3937.

GBPEUR in contrast made minor gains in the Thursday session, opening at 1.1675 and closing at 1.1687.

A stronger Dollar also meant losses for EURUSD. The pair started the session trading at 1.1980 and closed the day at 1.1925.

Boris Johnson yesterday stressed that the Oxford-AstraZeneca COVID-19 vaccine is safe despite concerns from other EU states who have ceased administering the vaccine. The Prime Minister even said that he will be receiving the vaccine himself on Friday and urged others to do the same when offered. The UK and EU regulators said that there is no evidence to suggest the Oxford-AstraZeneca COVID-19 vaccine caused blood clots.

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